Discounts by prestige brands during the past two or three years of a weak economy have apparently been accepted by affluent and luxury consumers without diluting the stature of the brands according to a new Spring 2011 survey of the wealthiest 10% of US households by the American Affluence Research Center.
About 60% of the affluent in the new Spring 2011 survey, the 19th in a continuing series of twice-yearly tracking studies, say the discounts did not affect their opinion of the brands, while a quarter said the discounts motivated them to make purchases they may not have otherwise made. Only 5% said the discounts lowered the image/prestige of the brand.
This data suggests that the affluent recognize there are certain situations where discounting by prestige brands is reasonable and understandable, if not part of an ongoing practice. About half said discounts seemed to be a reasonable way to maintain sales during the past two or three years. Less than 20% said the discounts raised potentially negative questions about whether quality had been lowered to offset the discounts and whether prior prices and profit margins were fair.
Similar responses were elicited when asked about their opinion of discounts that prestige brands communicate via the internet or mobile devices only to past customers or to “members” of special “flash sale” sites.
There were some substantial differences within the age, income, and net worth categories. Those under age 50 and the higher income and net worth groups (all of which have a higher than average awareness of the “flash sale” sites) are more likely to make incremental purchases.
This data suggests that the affluent do not have a problem with situations where discounting by prestige brands is limited to special groups. About 39% said this type of discounting seemed to be a reasonable way to build sales.
The age 50+, women, and the higher net worth groups were a bit more skeptical or critical in their responses to both questions.
Participants in the American Affluence Research Center Spring 2011 survey have an average annual household income of $333,000, an average primary residence value of $1.2 million, an average net worth of $3.1 million, and average investable assets of $1.8 million.
A description of the survey methodology and other detailed highlights of the survey can be viewed at: